Though it expects GDP to grow 7.2% in FY19, India Ratings said GDP growth would have been even better but for the global headwinds caused by an abrupt rise in crude oil prices and strengthening of the dollar. Besides, frequent revisions in GST rates, continued agrarian distress, slow progress on Insolvency and Bankruptcy Code cases, and liquidity crunch faced by non-banking finance companies post IL&FS saga, have caused hiccups on the domestic front.

The agency said the pressure on wholesale and retail inflation is likely to remain benign, subject to normal monsoons and Indian crude oil basket averaging about $55/barrel, prompting the central bank to cut rates in FY20.

Ind-Ra said investments are slowly but steady gaining traction with gross fixed capital formation growing 12.2% in FY19 and projected to clock 10.3% in FY20.

Like FY19, the agency expects all major sectors- agriculture, industry and services to contribute to gross value added (GVA) growth in FY20 from the supply side.

“However, key support to the GVA growth is expected to come from services, followed by industry and they are expected to grow at 8.3% and 7.4%, respectively, in FY20,” it said in a statement.